2018 (1) TMI 607

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....imed that these amounts were received as share application money from various parties, i.e. M/s. Creative Financial Services Pvt. Ltd.; M/s. Rahul Finlease P. Ltd.; M/s. Shri Niwas Leasing Finance Ltd.; M/s. Meghdoot Express P. Ltd. and M/s. Niti Housing Development and Finance Corporation Ltd.   3. The Assessing Officer (AO) was of the opinion that such large amounts of share application money need to be probed further and, therefore, required the assessee to furnish particulars, which it did. 4. The assessee inter alia provided details relating to the share application money provided by each of the entities - confirmation letters; board resolutions from each company; PAN card details; copies of the Memorandum and Articles of As....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....the hands of the appellant company. The assessing officer has not effected any enquiries to bring out any facts which could suggest that these parties have given accommodation entries to the appellant and that the money received from these parties is appellant's own undisclosed income and routed back to the appellant company in the guise of share application. Even appellant has not been provided with an opportunity to cross-examine the so called entry providers. He has simply relied upon the statement given by Sh. Mahesh Garg, Ms. Reba Garg and Sh. Vinod Garg to Investigation Wing of the Department in the year 2003. No concrete efforts have been made to verify the facts stated therein. On the contrary, the appellant has filed copies of ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....er has been established, even if there is a case of bogus share capital, it can not be added in the hands of the company unless any adverse evidence is no record. The Hon'ble Delhi High Court in the case of CIT vs. Divine Leasing & Finance Ltd. (supra) has laid down the law on the subject as to what is the extent of the burden that lies on the assessee to prove the cash credit in the share of share capital. The Hon'ble Court held that "if the relevant details of the address or PAN identity of the creditor/subscriber are furnished to the Department along with the copies of share holder's register, share application money forms, share transfer register, etc, it would constitute an acceptable proof or acceptable explanation by t....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....he said Sh. Suresh Chand Garg was neither the promoter nor the original director. The share application money was invested on the basis of the resolution of Board of Directors of the aforesaid company. In the said resolution, Sh. Deepak Changia was authorized to execute documents for the purpose of subscription to share capital. It is relevant to note that Sh. Deepak Changia was the Director of the company from the year 2003 and thereafter. The said facts have not been rebutted by the AD. Moreover, the authorized representative of the assessee was denied the opportunity to cross examine Shri Suresh Chand Garg. The reliance placed by the AO on the statement of Sh. Suresh Chand Garg in the absence of cross examination is incorrect. The law wi....